daily updates at nlj.com THE NEWSPAPER FOR THE LEGAL PROFESSION Monday, noveMber 12, 2007 patent law Two Patentability Rulings HE CONSTITUTION authorizes use of a computer or standard communications Congress to grant patents covering By Lewis R. Clayton facilities. the “useful arts”—what today might The Federal Circuit uses a two-part test be called technological innovation. to determine whether a process embraces TSection 101 of the current Patent patentable subject matter. First, patent Act—using language almost unchanged since claims must have a “practical application.” the 1793 patent law was drafted by Thomas For example, Benson found that a set of Jefferson—allows patents on “any new and instructions for converting binary-coded useful process, machine, manufacture, or decimals to pure binary numerals, otherwise composition of matter.” Construing that untied to any specific application, describes an language, the U.S. Supreme Court famously unpatentable mathematical principle. Second, declared patentable “anything under the sun a process is only patentable if it is “tied to that is made by man.” Diamond v. Chakrabarty, a specific machine” or “creates or involves 447 U.S. 303, 309 (1980). a composition of matter or manufacture.” But the court has long refused to allow Thus a process is patentable only if it “is patents on abstract ideas and mental attempt to identify patentable subject matter embodied in, operates on, transforms, or processes, laws of nature and natural while preserving abstract ideas for public use. otherwise involves another class of statutory phenomena, fearing that “basic tools of In re Comiskey, No. 2006-1286, 2007 WL subject matter, i.e., a machine, manufacture, scientific and technological work” would be 2728361 (Fed. Cir. Sept. 20, 2007), analyzed or composition of matter.” monopolized. Gottschalk v. Benson, 409 U.S. the most controversial kind of process Applying this test, the Federal Circuit 63, 67 (1972). More than 150 years ago, it claim—a business-method patent—and a had little difficulty finding Stephen W. explained that a “principle, in the abstract, split panel in In re Nuijten, No. 2006-1371, Comiskey’s claims nonpatentable in so far as is a fundamental truth; an original cause; 2007 WL 2728397 (Fed. Cir. Sept. 20, 2007), they simply claimed mental steps involved a motive; these cannot be patented; as no considered whether an electromagnetic signal in an arbitration process. While those claims one can claim in either of them an exclusive qualified as patentable. had practical application, they failed the right.” LeRoy v. Tatham, 55 U.S. 156, 175 second part of the test, lacking a link to a (1852). These limitations on patentability Is a process for conducting machine, manufacture or composition of are in inevitable tension with the reach of matter. The statute “does not allow patents the statute, particularly when the abstract arbitration patentable? to be issued on particular business systems— idea in question arguably is “made by man.” Comiskey focused on a patent application such as a particular type of arbitration— Two recent U.S. Court of Appeals for the covering a process for conducting arbitration. that depend entirely on the use of mental Federal Circuit cases illustrate the delicate Certain claims described nothing more than processes.” The court noted its long-standing line-drawing courts have found necessary to a series of mental steps—enrolling a contract refusal to approve patents on a “mental in an arbitration program, incorporating process standing alone and untied to another Lewis R. Clayton is a litigation partner at Paul, language mandating arbitration, conducting category of statutory subject matter even Weiss, Rifkind, Wharton & Garrison LLP, and the arbitration and ultimately reaching a when a practical application was claimed.” co-chairman of the firm’s intellectual property binding determination. Others referred The analysis was critically different, litigation group. He can be reached at lclayton@ to a series of “modules”—for example, a however, for Comiskey’s claims requiring the paulweiss.com. Jayson L. Cohen, an associate with “registration module,” an “arbitration module” use of modules or communication systems. the firm, assisted in the preparation of this article. and a “resolution module”—thereby requiring The module claims, “under the broadest The National Law Journal MONDAY, NOVEMBER 12, 2007 reasonable interpretation, could require the Are electromagnetic electromagnetic transmission does not fit use of a computer as part of Comiskey’s within that definition.” arbitration system.” The communications- signals patentable? Judge Richard Linn, dissenting, saw the system claims required that access to the The Federal Circuit’s split decision in case as presenting “challenging questions that system be “established through the Nuijten considered the ethereal issue of go beyond the single patent claim at issue,” Internet, intranet, World Wide Web, whether a “signal” can qualify as a patentable requiring the court to “reconcile cutting-edge software applications, telephone…or other “manufacture” under § 101. technologies” with ancient statutory language, communications means.” Without detailed Petrus A.C.M. Nuijten’s application against a “backdrop of ongoing controversy analysis, the court found that these claims, “in concerned digital watermarking of signals regarding the wisdom of software patenting” combining the use of machines with a mental carrying information, such as a radio and the State Street decision. He found the process,” were sufficient, without more, to broadcast or output from a CD player. Like signal patentable, concluding that the term embrace patentable subject matter. a watermark associated with the maker of “manufacture” is “not limited to tangible or But use of these machines would not seem a piece of paper, digital watermarking can non-transitory inventions.” to be necessary for effective practice of the be used to identify the originator of the Linn then reached a question not arbitration process described in the Comiskey signal, such as the owner of a copyright in considered by the majority—finding that the application. Including these elements in the a song. Watermarking typically changes a signal was not an unpatentable abstract idea. claims may have done little more than allow signal somewhat, introducing distortion into In contrast to the Comiskey court’s analysis, the patentee to argue that the second part the broadcast. Nuijten’s invention reduces Linn focused on whether the signal was “new” of the Federal Circuit’s test was satisfied. the distortion. and “useful” within the meaning of § 101. By contrast, in State Street Bank & Trust In this view, a new and useful invention Co. v. Signature Fin. Group Inc., 149 F.3d is far enough removed from abstract ideas 1368, 1371 (Fed. Cir. 1998), the landmark and principles to allow for patentability. The decision endorsing business-method patents, Two recent utility requirement differentiates “patentable the court found that a computer was “a virtual inventions involving the manipulation or necessity” to practice the invention, a complex Federal Circuit transmission of information from unpatentable system for monitoring and recording financial inventions whose only utility lies in the information about related mutual funds. The cases illustrate particular information they convey.” This split Comiskey court itself noted that “the mere decision illustrates ongoing debate in the use of a machine to collect data necessary for the delicate line Federal Circuit over the fundamental issue of application of the mental process does not patentable subject matter. make the claim patentable subject matter.” between patentable Last year, the Supreme Court accepted Even though it found patentable subject for review a petition challenging a patent matter, the court did not ignore the arguably subject matter and covering a method of diagnosing certain tenuous connection between the claimed vitamin deficiencies by measuring the level machines and the other elements of the abstract ideas. of a particular amino acid. When certiorari invention. It went on to hold that the issue was dismissed as improvidently granted, should be addressed on the question of three justices dissented, finding that the obviousness under § 103 of the Patent Act. It patent covered an unpatentable natural noted that the machine claims “at most merely phenomenon—a correlation between the add a modern general purpose computer Nuijten received patent claims for his measurement and the disease. Lab. Corp. of [and modern communication devices] to watermarking process, for machines that America Holdings v. Metabolite Labs. Inc., 126 an otherwise unpatentable mental process.” generated his watermarked signals and for a S. Ct. 2921 (2006). The Supreme Court may Citing KSR Int’l Co. v. Teleflex Inc., 127 S. device that stored them (e.g., a watermarked yet accept for review a case like Comiskey Ct. 1727 (2007), the court found that “the CD). All were patentable under § 101. The or Nuijten, raising these difficult issues of routine addition of modern electronics to an issue that divided the panel was whether the patentable subject matter. Certainly, the otherwise unpatentable invention typically signal itself could be patented. The majority debate will go on. creates a prima facie case of obviousness.” held the signal unpatentable, as it failed to Thus, it directed the Patent Office on remand fall within the four categories of § 101. It